| November 24, 2016


1. Assuming no government intervention, describe the market behavior that should result if the price of a product isbelowits equilibrium price; then describe the behaviorthatshould occur if the priceisaboveits equilibriumprice.

2. Howdoesinflationaffectpeople’sstandardsoflivingandsavings?

3. Definestock, bond,andmutual fund.What are the benefits and risksassociatedwitheach of these investments?

PartB:Answereachofthefollowingquestionsinonetofoursentences.Each answerisworthsevenpoints.

1. Suppose the economy isexperiencinginflation.Whatwouldbetheinterpretationofhowarestrictivemonetarypolicywouldaddressthisproblem?

2. .png”>Describetwotypesofspecializationinproduction.Whataretheeconomicadvantagesofspecialization?

3. What arepolitical business cycles,and how could they be created?

4. Why are financial institutions required to keepreserves?

5. What isa price ceiling,and what are its economiceffects?

6. Definetheconceptofoffshoring,andexplaintheeconomicreasonswhybusinesses use offshoring.

7. What is meant by economies of scale,and what is the importance of this concept to economicgrowth?

8. Define and explain each of the following: frictional unemployment,structural unemployment,and cyclicalunemployment.

9. What is the multiplier effect,and how does it affect theGDP?

10. .png”>Define the term business cycle,and listthe four phases of the businesscycle.

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